Shifting gears to the other high-yielder down under, the Australian dollar (AUD) has been range-bound since May, but was bumping up against the top of the range in mid-October. After soaring to its 2004 peak at 0.8005 in February, the AUD retreated into a clear-cut sideways range between roughly 0.6770 and 0.7370 in the May- October period.

“We may see a little more strength in the commodity currencies, like the AUD, but it is kind of a last gasp,” warns Solin. “There may be some life left in that trade, but not much. The risk is that you’ll see the latecomers come into that trade and that is it.”

Pointing to the economic outlook in Australia, Thomson Financial’s Rogers notes “people are getting a little nervous about where the Aussie economy is going to go. The fear is that China will slow down and they are Australia’s third largest trading partner.”

The overnight cash rate stands at 5.25 percent in Australia, with the late rate hike seen in December 2003. Looking across the foreign exchange markets, Rogers points out that recently “all the major currencies have made new highs in the last run lower in the U.S. dollar. But, the AUD is not evenclose. There is clearly a deceleration going on. The fears of a slowing economy are real.”

Economists are currently forecasting about 3.5 percent real GDP growth for Australia through mid-2005, which would be down from the second quarter 2004 year-over-year 4.1 percent pace.In recent market action, Rogers notes, “the Asian accounts have been selling into it rather than buying it. The AUD has been struggling to get above 0.7390.”

Rogers recommends traders look to sell the AUD on the crosses, such as the euro, the yen or the Swiss franc. Though, he adds, “selling it against the U.S. dollar would be tough because we are in a broadly declining dollar environment.”